Bank Of France

Selecting a new boss at the International Monetary Fund is turning into something of a farce. After four months of transatlantic arm-twisting, abstainers' "none of the above" votes prevailed in a straw poll that IMF directors took last Thursday. But that was a better result than electing the front-runner, the German deputy finance minister, Caio Koch-Weser, who is clearly not the right person for the job. The IMF was set up after World War II to stand guard over international monetary stability.

France trimmed a short-term interest rate Monday, the first sign that last week's loosening of Europe's exchange rate system could lead the Continent's recession-plagued nations to stimulate their economies. However, the cut was immediately followed by a weakening of the French franc against the German mark--which could forestall additional rate cuts. The Bank of France said it was cutting its rate for 24-hour loans to banks to 9.75%, from 10%.

The dollar fell sharply in hectic trading Tuesday, undercut by heavy selling of dollars by traders trying to minimize their losses. Gold prices, although mixed, ended the day up. Bullion was quoted at $340 an ounce at 4 p.m. EST at Republic National Bank, up 50 cents from Monday's bid. The dollar fell about 6 West German pfennings and almost 3 Japanese yen. "The market is a little nervous," said Earl Johnson, an assistant vice president at Harris Trust & Savings Bank in Chicago.

The French government offered a ray of hope to the flagging economy Monday by cutting its benchmark interest rate for the first time in more than a year. The Bank of France said it was taking advantage of a recovery in the franc and favorable inflation and balance-of-payments trends to reduce its money market intervention rate to 9.35% from 9.60%. It also trimmed its other main lending rate, for five- to 10-day repurchase agreements, by a quarter point to 10.25%. With 10.

Germany's central bank raised interest rates Thursday for the first time in more than five years, calling it a precautionary move against inflation. Central banks in France, the Netherlands and Denmark followed suit. The German Bundesbank announced it was increasing its securities repurchase--or repo--rates through Oct. 22 to 3.3% from 3% to preempt higher inflation and curb growth in the money supply. At the same time, the Bundesbank left unchanged its official discount rate at 2.

U.S. Federal Reserve Chairman Alan Greenspan indicated Sunday that he remains satisfied that the United States' economy is not growing strongly enough to cause concern about inflation, according to sources at an international monetary conference in Australia. One of the sources, who attended a Greenspan briefing by video link with Washington, said he thought the Fed chairman sounded "rather sanguine" about inflation in his private talk to commercial and central bankers attending the conference.

Germany's economy, Europe's largest, barely grew in the third quarter, data reported Monday show. And experts said there's little sign of improvement so far this quarter. That could force the European Central Bank to cut interest rates soon, some analysts said. The bank has been balking at making further cuts because of inflation worries in countries including Spain and Ireland. German gross domestic product rose 0.

Michel Camdessus, director of the International Monetary Fund, which found itself at the center of a global financial whirlpool in 1997 and '98 but later claimed vindication for its policies, said Tuesday that he would step down next year. Camdessus, 66, had two years left in his third five-year term at the world's key lending agency.

The central banks of West Germany, Britain and France today led a round of European interest rate cuts aimed at shoring up the U.S. dollar and helping repair the global damage from October's stock market collapse. The dollar rallied in Europe after edging lower earlier in the day. The Bundesbank, the central bank of West Germany, said it was cutting its discount rate, the benchmark rate at which it lends funds to private banks, to a record low 2.5% from 3%.

Technology shares rallied in foreign markets on Monday with investors enjoying a day free of the influence of New York's jittery Nasdaq market, which has been depressed by fears of further U.S. interest rate rises. European markets mostly gained, and many battered Asian and Latin American stock markets also closed higher. Meanwhile, the euro currency eased after surging late last week, falling to 92.4 U.S. cents from Friday's 93.2 cents.